Injunction Rocks Nascent Canadian Marijuana Industry

By
Craig Offman, The Globe and Mail
on April 3, 2014

Ottawa’s introduction of a medical marijuana strategy last summer was supposed to relieve some anxiety. Patients facing debilitating diseases would have wider access to cannabis produced in safe, regulated environments. Enforcement officials wouldn’t have to worry as much about pot going out the back door of grow-ops to criminal elements, and insurance companies wouldn’t have to grapple with house fires brought on by inexperienced growers who place too much faith in their electricity outlets.

But a temporary federal injunction last month has rocked the cradle of a nascent industry, a dozen or so companies licensed to sell medical marijuana to about 38,000 patients who face debilitating issues as varied as spinal-cord injuries, Parkinson’s disease and cancer. By April 1, around 24,000 marijuana growers were obliged to destroy around a total of 3.5 million plants, which in turn would have created a relatively huge base of customers who needed to buy marijuana elsewhere. The injunction, which Ottawa is appealing, put an end to that. Patients who have valid licences through September 30, 2013, can keep cultivating provided they keep no more than 150 grams of dried pot.

While some companies remain buoyant despite the ruling, other companies question the meaning of their own existence. There could be major revenue shortfalls, surplus marijuana and cut-throat competition.

“The injunction has really thrown a monkey wrench in this industry,” said Brent Zettl, the chief executive officer of Saskatoon-based CanniMed, the country’s largest cannabis company. “There will be a cash-flow crunch in the short term. We always say that necessity is the mother of invention, but cash flow is the father.”